How do I find the right price for my product?

Description

Steven Schuurman, CEO and Co-Founder of Elastic discuss the importance of adding value to determine the right price to charge.

Video transcript

How do I find the right price for my product?

Find the right price is always super tricky. What I’ve always done with Elastic, but also with my previous companies, is to spend the most time thinking about where in whatever I do, do I actually add the most value to my customers? And, if once you find that it becomes easier to figure out what do I charge for, what is my business model. Well, that’s number one.

In the second element of that is: what is the right price point? And I think the reality is that there is no Silver Bullet magic answer there. So what you do, is at least that’s how I do it, I figure out what’s fair, what’s a fair price point compared to how much business value does I actually add to the customer. The other part is you also have to look at the cost element, something is worth x, but you need to charge more or you can get away with it by actually charging less, because the cost associated with the product that you’re creating is not that high or extra high, you need to adjust your pricing there. In a perfect world, you can create a lot of value at a very reasonable price point and you still make money as a company, you have a nice gross profit and yeah, then you’re golden.